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Australia's Woodside eyes equity in Asian LNG receiving terminals

https://www.chemnet.com   May 26,2015 Platts
Australia's Woodside Petroleum is considering acquiring equity in LNG receiving terminals across Asia, Reinhardt Matisons, the company's executive vice president of marketing, trading and shipping, said Thursday, May 21.

"With a growing portfolio and greater potential for us to have short-notice cargoes on our hands, we need to continue to build optionality into our portfolio sales arrangements," Matisons told an investor briefing in Melbourne.

"So in addition to just contractual flexibility, we're looking for optionality through acquiring equity capacity rights in receiving terminals." Woodside estimates there are currently 60 receiving terminals across Asia Pacific, with another 40 under construction.

As a result, terminal capacity in the region will rise to 528 million mt by 2025.

"We are hoping that this access [to terminals] will assist us securing sales for our new projects as well as helping add value through our trading activities," Matisons added.

Woodside currently produces LNG in Western Australia at its 16.67%-held 16.3 million mt/year North West Shelf joint venture and 4.3 million mt/year Pluto project.

The company's equity and purchased LNG portfolio amounted to around 6.5 million mt in 2015.

Woodside will add equity production from its 13% share of the Chevron-operated, 8.9 million mt/year Wheatstone project in late 2016.

The company also recently confirmed a purchase of 850,000 mt/year of LNG from Cheniere Energy's $11.5 billion Corpus Christi liquefaction facility, starting in 2019, which will boost its portfolio to more than 8 million mt/year.

Post-2021, Woodside could be adding additional equity volumes from its 30% share of the Browse floating LNG project in Western Australia, expected to eventually comprise three facilities each producing 3.6 million mt/year, and its 50%-held Kitimat project in Canada.

Kitimat has previously been forecast to produce 10 million mt/year.

Matisons said the indications were that Asian Pacific LNG prices would remain differentiated from the US and European pricing for some time.

"Existing contracts, even those with price reviews, will for the most part retain oil indexation into the future," he said.

"Buyers in the region have committed to buy some volumes that are Henry Hub-linked from the US, and by 2020 that could represent up to 20% of the market in Asia Pacific. For new long-term contracts we believe buyers will continue use these pricing structures," he added.

"At an oil price of about $60/barrel, oil-linked pricing is possibly less than the perception of future Henry Hub-linked US deliveries into Asia," Matisons said.

"Because of that uncertainty, many buyers are struggling to make decisions on future purchases. That makes marketing a bit harder and that potentially challenges the feasibility of some projects' progress toward final investment decision."
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